Many property purchases involve a
seller, real estate agent/broker and mortgage agent/broker. The latter are both
licensed, regulated professionals who deal with different aspects of the
transaction. Each will take some of the same but also different due diligence
measures when working on a deal. Even if someone else who is party to a deal
indicates that they have performed due diligence, do you take their word for
it?
Due diligence has become hugely
important, both as it relates to not wasting time and expense on problematic
deals but also because it prevents fraud which is rampant today. The question
has often been posed: who bears the responsibility to perform due diligence –
the real estate agent/broker or the mortgage agent/broker? I think that this
question arises from time to time because both real estate agents/brokers and
mortgage agents/brokers both have a need to validate information like whose
name is on title, what is owed on the home, etc…
The evolution of technology has
brought us a number of different online tools that can be used to validate
critical information about a property and its owner. Many real estate
agents/brokers for example have access to tools like GeoWarehouse that they use
to validate home ownership information for example, while many mortgage
agents/brokers turn to Purview for this purpose.
Rather than either/or, we tend to
take the position that each individual should take their own measures to
complete due diligence, both to protect themselves and their partners but also
to close more deals and drive up closing rates.
As a mortgage agent/broker, what
information should you be seeking to validate at the application stage?
Verify who is on title to the
property. It is quite common to work on a deal and verify mortgages registered
on title, get an estimate of the property value, view the property’s sales
history, etc… This will enable you, if there are other people on title, to
determine more or less if the stated value in the application is accurate and
also to validate that all mortgages on the property have been disclosed and
that there are no discrepancies. It is common in the case of mortgage
refinancing for consumers to fail to disclose a second mortgage or home equity
line of credit. When this comes up on closing not only can your deal disappear
but considerable time will have been invested with your partners too: lender,
insurer, real estate lawyers…
Taking the responsibility to
perform your own due diligence has so many cost benefits. Time saved
underwriting deals, expense underwriting, strengthened relationships with
lenders because a higher percentage of the applications you submit will lead to
funded deals are just a few examples.
For more about the benefits of
performing your due diligence please contact Purview For Mortgage Brokers today
by calling 1.855.787.8439.
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